In a concerning development for the Nigerian economy, the nation’s currency, the Naira, has suffered another significant depreciation against the US Dollar. On Wednesday, it closed at an alarming rate of N950/$1 in the parallel market, marking a substantial loss of value compared to the previous day.
Just a day prior, on Tuesday, September 12, the Naira had closed at N930/$1, indicating a rapid decline in its value over a span of just 24 hours. The situation worsened on Wednesday, with the Naira trading at both N935/$1 and N950/$1 at different points during the day.
This concerning trend was also observed in official exchange platforms. According to Bureau de Change operators, the Naira closed at 758.12/$ on Wednesday, a significant drop from the rate of 742.10/$ on Tuesday, as per data from the Investor & Exporter forex window, which is tracked on the official trading platform, the Financial Markets Dealers Quotations (FMDQ).
Yusuf Kareem, a Bureau de Change operator, expressed his bewilderment over the situation, stating, “We commenced trading at 930/$ in the morning and it closed at 950/$ in the evening. The Naira has been scarce; we don’t know what is happening.”
Sanusi Ibrahim, another BDC operator, echoed these sentiments, indicating that the Naira was being bought and sold at N935/$1 and N950/$1 on the same day. The uncertainty surrounding the Naira’s exchange rate has left market participants deeply concerned about future fluctuations.
The Association of Bureaux De Change Operators of Nigeria (ABCON) has recently appealed to the Central Bank of Nigeria (CBN) to provide Bureaux De Change operators with digital autonomy. They believe that this autonomy will help achieve exchange rate convergence and curb market volatility.
ABCON’s President, Dr. Aminu Gwadabe, urged the CBN to grant approval for BDCs to transition fully to digital operations. This transition, he argued, would lead to a more accurate market rate discovery, support the government’s harmonized foreign exchange rate policies, and enhance the monitoring of BDC transactions for regulatory compliance.
In related economic news, Nigeria’s trade deficit for the second quarter of 2023 reached a staggering N5.7 trillion, as revealed by the Foreign Trade Statistics report. The report, published by the National Bureau of Statistics (NBS), disclosed that Nigeria’s total trade volume stood at N12.7 trillion, with total exports amounting to N7 trillion and total imports at N5.7 trillion. Additionally, the report highlighted a 17% increase in revenue from Value Added Tax (VAT) and Company Income Tax (CIT) during the first half of 2023 compared to the same period in 2022.
The situation with the Naira’s depreciation and the widening trade deficit underscores the economic challenges facing Nigeria and the need for urgent measures to stabilize the currency and address trade imbalances.